Commentary

229.1 The need for restrictive covenants

BUSINESSES vol 4(2) start-up, sale and purchase

229.1 The need for restrictive covenants

229 Restrictive covenants

229.1 The need for restrictive covenants

A transfer of the goodwill of the business normally confers on the buyer the exclusive right to carry on the business transferred, together with the exclusive right to use the name under which the business has been established. However, in the absence of an express covenant against competition, the seller may prima facie set up a competing business and solicit former customers. This is because the courts will not imply any covenant by the seller not to do these things.

Exceptionally the buyer may be able to restrain the seller from these activities.

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